Sudeep Shah, Head - Technical Research and Derivatives at SBI Securities
Indian equity benchmark indices Nifty and Sensex endured a subdued trading session for major part of the day before a sharp move in the last hour of the day led to Nifty closing the day in the green. The market optimism was driven by positive global cues and Reserve Bank of India’s dovish stance.
Nifty Metal & Nifty India Defence ended up with the gains in the range of 1.8-2% while PSU Bank Index closed with a gain of 1.12%. On the other hand, Nifty Healthcare & Nifty Realty ended up as top two sectoral losers. Tata Steel & Power Grid ended up as the top gainers, while Max Health & Tech Mahindra emerged as the top two losers.
Broader Indices stayed strong, keeping overall sentiment positive during the trade. The Midcap 100 Index & Smallcap 100 Index ended 0.83% and 0.69% higher respectively. The advance-decline ratio was skewed in the favour of the bulls. A total of 329 stocks out of the Nifty 500 closed in the green.
Nifty View
Nifty remained sideways for major part of the day, facing strong resistance around the 24,840-24,850 zone, before breaking out towards the last hour of the day, closing at 24,894 with a gain of 0.23%. The index formed a bullish candle and gave a higher close for the second consecutive day. The index, also managed to close above the 100-day EMA zone of 24,740-24,750, suggesting that this zone is acting as immediate support.
Nifty trades comfortably above its 200-day EMA (24,411) but faces resistance from the 20-day EMA (24,914), which can cap the upside momentum. Sustaining above these levels is essential for further recovery.
The RSI has bounced from near oversold territory but remains tad below the neutral 50 mark, suggesting cautious optimism with scope for improvement. MACD remains in negative territory, but the histogram shows shrinking red bars, indicating that bearish momentum is gradually weakening and a bullish crossover could emerge if recovery extends.
Looking at key levels, the 24,920–24,950 zone will act as an immediate resistance for the Index. If the index manages to move above the level of 24,950, the pullback can extend further till 25,100 level. While, on the downside, the zone of 24,800-24,750 will act as a crucial support for the Index.
Bank Nifty View
Bank Nifty formed a sizeable bullish candle on the daily chart, showing continued buying support at lower levels. The ratio line in Bank Nifty/Nifty ratio chart is rising and trades above all key moving averages, a sign that Bank Nifty is significantly outperforming the Nifty Index.
The index is trading well above its 200-day EMA (53,833), and reclaiming the cluster of short- and medium-term EMAs signals a shift in trend back to bullish territory.
RSI is inching towards the 60 mark, suggesting strengthening bullish momentum with room for further upside. The +DI crossing over -DI in ADX indicator, confirms that the buyers are in control. MACD has turned positive with a fresh bullish crossover, supported by green histogram bars, pointing towards continuation of the uptrend.
The overall structure suggests that Bank Nifty is regaining leadership after a phase of consolidation.
Looking at key levels, the 55,700–55,800 zone will act as an immediate resistance for the Index. If the index manages to move above the level of 55,800, the pullback can extend further towards 56,300, followed by 56,600. While, on the downside, the zone of 55,200-55,100 will act as a crucial support for the index.
